May 7 Asian Marco Initial Thoughts. Big day for Chinese Data out after the open


07 May

Asia
Australia 
Pre Market Services Index was better than F/cast +VE, futures indicate +23pts but expect initial caution ahead of the RBA Statement on Monetary Policy. Oil weak -VE for Santos and Woodside but Miners Newcrest and St Barbara +VE as Gold breaks above $1,800 Macquarie FY results due. NAB +VE as GS put a conviction Buy on the stock post results.
Data
Services Index Apr 61.0 vs 58.7 Mar (F/cast was 59)
Japan 
Nikkei futures opened higher +20pts but have eased to flat, expect a higher open following the US with the expectation of a good jobs number tonight.
S Korea 
Expect markets to open cautiously higher following the US rebound.
Taiwan 
Market to open higher following the US and good wholesale price data after market Thursday
China 
Market to open lower with caution ahead of data and concerns over international relations.
HK 
ADR’s indicate flat at 28,636 with Petro and E-commerce names weak but Chinese Financials slightly +VE along with HKEX which will benefit from the Wealth Management Connect proposal. Chinese Developers +VE on more good sales data.
US Futures 
Opened Dow -18pts S&P flat and NDX +0.1% Caution ahead of tonights jobs report.

Drug companies may see a rebound as Germany opposes waiving IP rights on covid vaccines. “The protection of intellectual property is a source of innovation and it must remain so in the future,” Merkel said

DOW +0.93%, NDX +0.37%, S&P +0.82%, Russel 2K unch
Markets opened flat, despite good jobs data; Dow traded sideways through the morning. S&P and NDX initially weak but worked back to flat by lunch. Around lunchtime the Dow rose after the BoE news then drifted lower in the PM before rallying at the end to close at a new high. The S&P and NDX traded in a similar pattern close at day highs.The Fed’s semiannual Financial Stability Report warned rising asset prices in the stock market and elsewhere are posing increasing threats to the financial system. Fed Governor Lael Brainard said the situation bears watching and points out the importance of making sure the system has proper safeguards. She specifically mentioned having banks increase their capital requirements during economic expansions as a buffer against downturns.
PayPal +1.9% off initial highs after the company posted better-than-expected earnings pre market.
Etsy -14% despite beating estimates after market Wednesday; warned sales will slow as the pandemic boost wanes.
Sunrun +11.7% and Zynga +5.6% after they beat estimates after market Wednesday Gap higher again in early trading
Drug makers weak but off initial lows Moderna -1.4%, Pfizer -1.9%, AstraZeneca unch
Banks JPMorgan Chase +2.1%, Citigroup +1.5% Wells Fargo +1.5%, Amex +0.3%
Work from home names: Facebook +1.6%, Apple +1.3%, Amazon +1.1%, Netflix +0.7%,  Disney +0.2%, Zoom Video -1.5%, Alphabet +1% and Microsoft +1.3%,
Tech NXP Semi 1.1%, Nvidia +0.5%, Micron -0.4%, AMD +0.1%, Skyworks +1.1%
Re-opening stocks  Boeing +0.7%, Caterpillar -0.3%, Simon Property +1.7%, Kohl’s -0.2%, Nordstrom -0.6%, Gap +1%, United Airlines -0.4%, Carnival -2.2%, Wynn Resorts -3.9%, Chevron +0.1%, Exxon Mobil +1%,  
Lock down names Campbell Soup +2% General Mills +2.9%, JM Smucker +1.9%
After market earnings 
Dropbox +1.9% (was -1.3% in normal hours), Expedia +4.8% (was -3.6% in normal hours), Roku, +8.9% (was -6.6% in normal hours), Beyond Meat -6.5% (was -2.1% in normal hours) as retail purchases fail to make up for weak restaurant sales, Shake Shack -8.9% (was -0.6% in normal hours), and Square +2.5% (was -3.4% in normal hours) earnings bolstered by Bitcoin,
DATA
Challenger Job Cuts Apr 22.913k vs 30.603k Mar (F/cast was 25k)
Unit Labour Costs Prelim Q1 -0.3% QoQ vs +5.6% Q4 (F/cast was -0.8%)
Nonfarm Productivity Prelim Q1 +5.4% QoQ vs -3.8% Q4 revised (F/cast was +3.2%)
Initial Claims 498k vs 590k prior revised (F/cast was 545K)
4 week Average Claims 560k vs 621K prior revised. (F/cast was 562.5k)
Continuing Claims 3.69m vs 3.653m prior revised (F/cast was 3.61m)
EIA Natural Gas Change 60 Bcf vs 15 Bcf (Consensus was 64 Bcf)
USD dipped very slightly vs Yen & Euro. Bitcoin -1.5% @ 56,402.76, VIX -4% @ 18.39, US T10 @ 1.57% after good jobs numbers
OIL Brent -1.02%, WTI -1.17% India’s continuing surge in cases and impact on global traded and demand finally weighs on oil price.
Gold 1.75% breaks $1,800 resistance, Silver +3.44%, Copper +1.9% Platinum +2.3%, Palladium -0.9%.
AHEAD NonFarm Payrolls, Unemployment Rate, Ave Weekly Hours, Ave Weekly Earnings, Participation Rate, Wholesale Inventories,  Baker Hughes Rig Count, Consumer Credit Change.

Earnings Cigna, Siemens, Gannett, AMC Networks, Draftkings, Liberty Broadband, Elanco Animal Health

DAX +0.17%, CAC +0.28%, FTSE +0.52%  (a year high)
Markets to opened slightly higher with mixed pre market data. DAX & CAC rallied initially but then reversed currently trading in the red around flat. FTSE opened higher and trading sideways in the green with some caution ahead of the BoE rate decision and local government elections. After the BoE left rates unchanged but raised its forecasts markets traded sideway around flat.Travel & Leisure lead the declines along with tech with most sectors struggling.
Earnings in focus Air France-KLM -2.6%, ING -0.7% and UniCredit +5% among the blue chip companies that reported.
Soc Gen +5.5% on reporting a “record” quarter for its trading division, beating expectations for Q1 2021. Net income of 814 million euros ($977 million).
AB InBev+5.2% beat profit expectations; core earnings +14.2% also announced that CEO Carlos Brito will step down in July to be replaced by North American boss Michel Doukeris.
Volkswagen -2.6 despite raising its margin target after seeing a surge in demand for higher-priced vehicles in Q1.
SES +9.3% after a strong earnings report which saw the company announce a 100 million euro share buyback program.
Shop Apotheke -8.8% after disappointing earnings.
Telecom Italia -5.5% after an Italian media report suggested that the company’s single network plan had been parked.
DATA
EUROZONE
Construction PMI Apr 50.1 vs 50.1 Mar (F/cast was 52)
Retail Sales Mar +2.7% MoM vs +4.2% Feb revised (F/cast was +1%)
Retail Sales Mar +12% YoY vs -1.5% Feb (F/cast was +8.3%)
GERMANY
Factory Orders Mar +3% MoM vs +1.4 % Feb revised (F/cast was +1.5%)
Construction PMI Apr 46.2 vs 47.5 Mar (F/cast was 52.5)
FRANCE
Construction PMI Apr 49.8 vs 49.7 Mar (F/cast was 51.9)
Retail Sales Mar -1% MoM vs +1.6% Feb revised (F/cast was +0.6%)
Retail Sales Mar +21.3% YoY vs +3.9% Feb revised (F/cast was +8.5%)
UK
Services PMI Apr 61.0 vs 56.3 Mar (F/cast was 60.1)
Composite PMI Apr 60.7 vs 56.4 Mar (F/cast was 60)
BoE Interest Rate Decision no change and QE no change; expects FY 21 growth of 7.25% ahead of forecasts after covid inoculations +VE
AHEAD
EUROZONE No data
GERMANY 
Balance of Trade, Exports, Imports, Industrial Production, Current Account
FRANCE 
Balance of Trade, Exports, Imports, industrial Production,
UK 
Construction PMI

JAPAN Nikkei futures opened higher +20pts but have eased to flat, expect a higher open following the US with the expectation of a good jobs number tonight. But may see initial caution ahead of PMI dataYen currently 109.09
Data due pre market
Average Cash Earnings due Mar (Feb was -0.2% (F/cast is +0.1%)
Due after the open
Services Final PMI Apr (Mar was 48.3 (F/cast is 48.3)
Composite Final PMI Apr (Mar was 49.9 (F/cast is 50.2 )
Tokyo reported 591 new covid cases (vs 621 Wednesday) Osaka 747 (vs 668 Wednesday)  nationwide the total was 4,372
Government decision on extending the state of emergency until May 31 expected  in a bid to curb coronavirus widespread. Such a move arouses concern about the Japan's capital ability to host the Olympics as scheduled.
Nintendo announced that operating income reached JPY119.5 billion during the quarter ended March 2021, beating the consensus, after home-entertainment and "Monster Hunter Rise" had propped up demands of the game console. It guided FY21 operating income to hit JPY500 billion. But warned chip shortages may hit Switch sales.
Japan has recently made illegal the carrying or sending of seeds or seedlings of domestically developed farm products out of the country as it tries to protect local producers from the impacts of unauthorized overseas cultivation.  The Ministry of Agriculture, Forestry and Fisheries says China and South Korea have cultivated the Shine Muscat grapes and exported them to Southeast Asia and other areas without permission.
Australia's competition regulator on Thursday said it would block a pricing, code-sharing and scheduling deal between Qantas and Japan Airlines because it would likely mean higher fares for passengers.

SOUTH KOREA 
Expect markets to open cautiously higher following the US rebound.Data out Current Account Mar $7.82b  vs $8.03b Feb. (F/cast was $7.6b)
KDCA reported 574 new covid cases Thursday vs 676 Wednesday +VE
South Korean police raided on Thursday the office of an anti-North Korea activist group that said it had released balloons into the North last week carrying dollar bills and leaflets denouncing the government in Pyongyang.
Roche Diagnostics Korea announced Thursday that the company has received approval for the cobas test, an assay used to specifically detect the severe acute respiratory syndrome coronavirus in laboratories settings.
Samsung Electronics unveiled a new packaging technology Thursday that would help differentiate its foundry service.   It said it has completed the development of the next-generation 2.5D packaging technology named Interposer-Cube4, or I-Cube4, which is immediately available for customers.  It is a heterogeneous integration technology that horizontally places one or more logic dies, such as a CPU or GPU, and several high bandwidth memory dies on top of a silicon interposer, meaning that multiple dies operate as a single chip in one package. Doosan Heavy Industries & Construction will transform plastic waste into gases by heating it up, and extract hydrogen from those gases, the company said Thursday.   Seeking to jointly develop the hydrogen extraction system, Doosan Heavy has partnered with RevoTech, a local plastic pyrolysis firm which possesses the technology involved in feeding plastic waste non-stop into heating equipment.
Kakao Corp., the operator of South Korea’s top messaging app KakaoTalk, posted a record-breaking revenue of 1.25 trillion won ($1.1 billion) for the first quarter, up 45 percent from a year earlier, the company said Thursday.
Dunamu, an operator of cryptocurrency exchange Upbit, said Thursday that it will spend 10 billion won ($8.9 million) to set up a unit to protect crypto coin investors. It is part of the company’s efforts to join the environment, social and governance trend, which has been gaining traction worldwide recently

TAIWAN 
Expect market to open higher following the US and good wholesale price data after market Thursday 
Data due after market Balance of Trade, Exports, Imports.
Data out after market Thursday
Wholesale Prices Apr +9.62% YoY vs +4.36% Mar (F/cast was +8.4%)
Inflation Rate Apr +0.2% MoM vs +0.33% Mar (F/cast was +0.2%)
Inflation Rate Apr +2.09% YoY vs +1.24% Mar (F/cast was +1.8%)
CPI Although the reading was the highest in more than three years, and set to stay there this month (due to the low base effect), consumer prices are manageable, a DGBAS official said. It was driven by sharp increases in fuel costs and airfares, while prices in other consumption categories also gained momentum,
In the face of a Chinese “final assault,” Taiwan is looking for tangible Australian support for Taiwanese participation in international affairs, Minister of Foreign Affairs Joseph Wu said in an interview with the Sydney-based Australian Financial Review. Taiwan urges Australia to stand together with Taiwan to fight Chinese President Xi Jinping’s expansionism in the democratic world, Wu said in the interview published yesterday.
TPK Holding Co a supplier of touch modules and touch sensors, yesterday posted its strongest first-quarter net profit in about four years, thanks to rush orders from mobile phone customers and strong demand for tablets due to the COVID-19 pandemic.  The growth momentum is expected to weaken this quarter as the industry enters a slow season, before new orders begin in preparation for the second-half shopping season, TPK said.  Revenue might fall 10 to 15 percent sequentially this quarter, from last quarter’s NT$29.19 billion (US$1.04 billion) based on experience over the past few years, TPK said.
EVA Airways Corp shares yesterday were -21%  after the firm reported widened losses of NT$2.19 billion (US$78.24 million) in the first quarter as passenger revenue plummeted 91 percent from a year earlier amid COVID-19 pandemic border controls.  The quarterly loss widened from a net loss of NT$1.22 billion in the first quarter last year, with passenger ticket sales higher last year, as operations were largely normal in January, before restrictions were imposed, company data showed.
Formosa Plastics Group yesterday reported NT$138.9 billion (US$4.96 billion) in combined revenue for its four major subsidiaries last month, +0.4% MoM  and +84.1% YoY.  Last year’s low comparison base partially accounted for the increase, but continued strong demand was also a factor, with subsidiary Nan Ya Plastics Corp reporting record monthly revenue.
Average daily day trading transaction on the local stock market  climbed to a high of NT$66.1 billion (US$2.36 billion) in March, prompting a call for the Financial Supervisory Commission (FSC) to rethink an extension of a tax cut on day trading transactions.  In April 2017, a tax cut on day trading transactions — from 0.003 percent to 0.0015 percent — took effect. It was to return to the previous level next year, but the commission and the Ministry of Finance have proposed extended the cut for another five years.  Experts said the policy favors intraday traders and has made the local stock market a “casino.”


CHINA 
Expect market to open lower with caution ahead of data and concerns over international relations.
Data due after the open 
Caixin Services PMI Apr Mar was 54.3 F/cast is 54.5
Caixin Composite PMI Apr Mar was 53.1 F/cast is 53.3
Balance of Trade Apr Mar was $13.8b F/cast is 14.5b
Exports Apr Mar was +30.6% F/cast is +35%
Imports Apr Mar was +38.1% F/cast is 37%
After market Foreign Exchange Reserves
China set an initial quota of 150 billion yuan (US$23.2 billion) for transactions under its Wealth Management Connect scheme that links southern Guangdong province with offshore centers Hong Kong and Macau, according to draft rules published on Thursday, Reuters reports. The cross-border pilot scheme, announced a year ago, allows residents of the two offshore centers and those in nine cities in Guangdong to buy financial products in the other markets. Net cash flows in either direction must not exceed 150 billion yuan and the individual investment quota is 1 million yuan, according to draft rules published by the central bank.   +VE HKEX (388 HK )
China’s total debt ratio fell 2.6 percentage points to 276.8 per cent of GDP in the first quarter after rising amid the pandemic last year.   Central bank says debt ratio reduced without tightening credit conditions, but by greater efficiency of economic support measures.“As the impact of the pandemic gradually abates, the stabilisation of economic growth has been matched with that of the debt level, so [we] estimate the macroeconomic leverage ratio will remain basically stable this year,” said the report’s authors Ruan Jianhong, head of the PBOC’s statistics and analysis department, and her colleague Liu Xi.   Slight +VE but many still expect tightening.
Chinese President Xi Jinping told Communist Party officials at the start of the year the world was in “turmoil” and would be for some time, but regardless of the challenges it faced, Beijing was “invincible”.  His comments came in a speech made during a study session at the Central Party School on January 11 – just five days after a mob stormed the US Capitol in Washington – and was published in full by party journal Qiushi on Friday.
“At present, the world is experiencing profound and unprecedented changes,” he said. “The most conspicuous feature of the world today can be summarised in one word – ‘turmoil’ – and it looks like this situation will continue for some time.”
“Judging from how this pandemic is being handled by different leaderships and [political] systems around the world, [we can] clearly see who has done better,” he said, without mentioning any countries by name. “Time and history are on our side and this is where our conviction and resilience lie, and why we are so determined and confident.” Nonetheless, China still faced many challenges and uncertainties, he told the cadres. Gives insight into China’s current aggressive behaviour but may not be justified. -VE
China condemned on Thursday a joint statement by G7 foreign ministers that expressed support for Chinese-claimed Taiwan and cast Beijing as a bully, saying it was a gross interference in China’s internal affairs.  The G7 also said they supported Taiwan’s participation in World Health Organization forums and the World Health Assembly - and expressed concern about “any unilateral actions that could escalate tensions” in the Taiwan Strait.
President Biden’s team likely to proceed with Trump’s China investment ban but no decision has been made yet -VE
China hopeful EU investment deal can be ratified despite growing doubts over its future. Foreign ministry spokesman says Beijing wants to keep communication open with Brussels for the CAI to be ratified as soon as possible
China-Australia tensions ratchet up unease in Beijing about surging iron ore prices.  China is growing very concerned  about soaring iron ore prices amid heightened trade tensions with Australia, which supplies 60% of its imports.  Which could result in efforts to reduce steel demand   but that would probably be -VE for the Chinese economy.
EssilorLuxottica posted a 14.3% rise in first-quarter sales on Thursday powered by a strong rebound in China and the United States as the maker of Oakley and Ray-Ban sunglasses targets a full recovery from the pandemic this year.
Tesla said on Thursday it was developing a platform for car owners in China that will allow them to access data generated by their vehicles. It aims to launch the data platform this year, it said in a statement.  This is the first time an automaker has announced plans to allow customers access car data in China, the world's biggest car market.

HONG KONG  
ADR’s flat at 28,636 with Petro and E-commerce names weak but Chinese Financials slightly +VE along with HKEX which will benefit from the Wealth Management Connect proposal.   Chinese Developers +VE on more good sales data. 
Data due after market Foreign Exchange Reserves
Short Selling Thursday 13.1% vs 15.2% Wednesday 
Top Shorts Ali Health (241) 42%, Wharf REIC (1997) 40%, Country Garden (2007) 37%, Bank Of China (3988) 31%, Bud Apac (1876) 31% (after reporting), MTRC (66) 30%, BOCOM (3328) 29%, Hengan (1044) 29%, NWD (17) 29%, CSPC Pharma (1093) 28%, Sunny Optical (2382) 27%, Power Assets (6) 27%, BABA (9988) 25% (reports next week).

SECURITY LAW 
Five members of localist group Returning Valiant have been arrested on suspicion of subversion under the national security law over social media comments and banners advocating Hong Kong independence.
National security police yesterday cordoned off and searched Chickeeduck's Tsuen Wan branch - a chain known for selling products in support of protesters during the anti-fugitive bill movement.  The one-hour raid came on the same day pro-Beijing newspaper Wen Wei Po questioned whether the shop has breached the national security law implemented in June.
WATCH
HUA MEDICINE-B (02552.HK) announced that it granted 1 million share options to an employee of the Company pursuant to the Company’s share option scheme at an exercise price of Share Options granted of HK$4.886 per Share. The validity period of the Share Options was ten years from the date of grant.
Wharf Real Estate Investment (1997), owner of Times Square and Harbour City luxury malls, will reduce rental support this year, as local consumption has almost recovered, said chairman and managing director Stephen Ng Tin-hoi.  Wharf REIC offered HK$2 billion of rent support to retail tenants last year but Ng said the rent support will be less this year as the overall rents of new rental leases have dropped. He added that mutant viruses are a fresh risk to the retail industry. Slight -VE Retail operators and Slight  +VE Landlords
Swire Properties (1972) said the occupancy rate of its Hong Kong office portfolio rose 1 percentage point to 97 percent as of March 31 from December 31, while retail sales at Pacific Place mall grew 31.1 percent in the first quarter.
The tender for a commercial site at Caroline Hill Road in Causeway Bay closes today, and Hysan Development (0014), the biggest landlord in Causeway Bay, is considering bidding for the plot. The plot, which was rezoned after serving as the Electrical and Mechanical Services Department's former headquarters, covers an area of 159,305 sq ft and provides a total gross floor area of 1,076,391 sq ft.  Property consultant Pruden has valued the site at HK$14 billion, or HK$13,000 per buildable sq ft.
Henderson Land Development (0012) had received 2,067 checks for the 196 units for the first three price lists of The Henley I in Kai Tak, as of 2.30 pm yesterday, making the units more than 10 times oversubscribed.
The number of private flats completed in the first quarter plunged 39.6% YoY to 2,249, according to the Rating and Valuation Department.  +VE for Developers
The Government will announce as soon as tomorrow that the quarantine period for citizens could be reduced to seven days, providing that 14 days have passed after their second Covid vaccine doses, local media citing sources.
SF REIT IPO orders drop by $44m as some investors have canceled their orders for the initial public offering of SF Real Estate Investment Trust, data from 11 local brokers showed. -VE
According to BABA-SW (09988.HK)'s Fliggy, the ticket booking volume in China's scenic areas grew more than 420% yearly, and hotel reservation load up over 200%, during the "May 1" holiday 2021.  Meanwhile, Generation Z (post 95's) has turned out a major consumption power in tourism during the holiday.
Fitch said Chinese regulators had asked Ant Group to delink its microlending business from the Alipay payment platform, which proved Beijing's concern about mitigating financial system and social stability risks posted by the online microlending industry. Additionally the move indicated the Chinese government's efforts in rectifying anti-competitive acts in the third-party payment market.
DONGFENG GROUP (00489.HK) announced that April vehicle production volume was 257,900  +2.5% YoY and sales volume 268,500 units +9.9% yearly. +VE
DEXIN CHINA (02019.HK) announced that for the one month ended 30 April 2021, the Group achieved a contracted sales amount of approximately RMB6.8 billion, up 13.7% yearly. +VE
CHINA OVERSEAS (00688.HK) announced that for April, the contracted property sales of the China Overseas Series of Companies amounted to approximately RMB31.726 billion, +13.5% YoY; and the corresponding GFA sold was approximately 1.485 million square meters, remained flat year-on-year. +VE
CH OVS G OCEANS (00081.HK)  announced that the property contracted sales for April 2021 amounted to RMB6.16 billion, up 55.9% yearly. +VE
KWG GROUP (01813.HK) announced that for April, the pre-sales value amounted to RMB12.925 billion, representing a year-on-year increase of 98.5%. The pre-sales area amounted to 668,000 square meters, representing a year-on-year increase of 59%. +VE
R&F PROPERTIES (02777.HK) announced that the total contracted sales for the month of April 2021 amounted to approximately RMB9.7 billion, up 5.2% yearly. +VE
SUNSHINE 100 (02608.HK) announced that, in April, the Group achieved contracted sales of RMB367 million, down 12.41% YoY.  The corresponding contracted sales area was 29,100 sq.m., down 29.24%. -VE
CKH HOLDINGS (00001.HK)'s CK Hutchison Group Telecom Holdings announced that revenue for the Q1 ended 31 March 2021 reached EUR2.461 billion, -2% YoY and down 8% QoQ.  Total margin amounted to EUR1.705 billion, -3% YoY and -4% QoQ. -VE
GIORDANO INT'L (00709.HK) issued a positive profit alert of an expected profit attributable to Shareholders for the six months ending June 30, 2021, representing a turnaround from a loss attributable to Shareholders of approximately HK$175 million for the six months ended June 30, 2020. +VE
Centa Valuation Index (Major Banks) (CVI) last stood at 81.77 this week, down 4.7 pts weekly. The index failed to surmount 90 and, yet, stood firmly aloft 80, indicating bankers' active and rational stance on mortgage business, said the research department of Centaline Property.
RTHK  executive producer who headed RTHK's Hong Kong Connection resigned soon after he was told the documentary program must focus on livelihood instead of political issues.  Another sign of Beijing’s influence over the previously free media in Hong Kong -VE

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